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Markets for General Partner Transfers During Compliance Period General Partner Transfers: The Buyer’s View Basil Rallis Tax Credit Property Disposition: A New Generation of Rights, Obligations and Opportunities Through Year 15 and Beyond October 11 & 12, 2007 L.P. Initiated --LP has removed original GP and is selling the GP rights Positives – Single point of negotiation – Same goal of moving towards a closing – Rarely involved personnel issues L.P. Initiated Continued Negatives – Often challenged properties are paired with performing…the Good, the Bad and the Ugly…dealing with negative capital accounts, and foreclosure risk. – Non-affiliated, or Non-profit partners that need to consent, may feel cut out of the transaction. L.P. Initiated Continued Mechanics – Fairly straight forward accounting issues, without many surprises. – LP understands the tax and accounting issues. G.P. Initiated -- Successful GP is looking to sell their various economic interests Positives – It’s a deal! That is Always A Plus… – – Usually represented by professional who can manage the process and expectations…It is not closing in 30 days! Some opportunities to add talented staff to your organization G.P. Initiated Continued Negatives – The Consent Process… – – – The LP approval – The need to improve upon their current position, and settle up with the departing GP. Does The LP Approval change the economics for the buyer, or seller? How to “adjust” and not renegotiate. Pushing on a string – No control on timing; motivating the required consenting parties. G.P. Initiated Continued Mechanics – Not So Straight Forward… – – – – Price allocations – Hot Assets (deferred developer fee) GP Interests, receivables. Reinterpreting the Partnership Agreement; Are the receivables, really capital? Cleansing the Balance Sheet – Proration of expenses, capex requirements – whose dime? Controlling slippage – Declining operations associated with protracted closings Markets for General Partner Transfers During Compliance Period General Partner Transfers: The Buyer’s View Basil Rallis Director Cascade Affordable Housing Tax Credit Property Disposition: A New Generation of Rights, Obligations and Opportunities Through Year 15 and Beyond October 11 & 12, 2007